tv Bloomberg Daybreak Europe Bloomberg February 10, 2020 1:00am-2:00am EST
♪ manus: good morning from dubai. it's bloomberg daybreak: europe, , i'm manus cranny. nejra: a these are today's top stories coronavirus deaths exceed the total from sars. reports suggest that companies will resume china operations. gold holds gains on the who's warning. oil is above the $50 mark as an extraordinary opec+ meeting looks unlikely. one analyst says it is hard to understand chinese economy and the coronavirus has made it
harder. he testified in congress this week that she will testify in congress this week. -- he will testify in congress this week. ♪ manus: it is daybreak europe, as the world begins to grapple with warnings on supplies from the world health organization. to me, it is about the response organism. mohamed el-erian warns about the potential of a u-shaped recovery. offering nearly $4 billion in liquidity relief. that pushes back against the risk of any counterparty restriction as we saw back in the financial crisis that 2008.an refers to of nejra: but you do wonder how much of that report from the boc
, if it will have a big impact. when the banking sector in china looks so different to during the crisis.l also, express are grappling with finding high-frequency indicators to see how the virus will play out and the impact it will have on the global economy, if we get a u-shaped or l- shaped, rather than a -- recovery. manus: it is headland of to headline. the aussie dollar jumps from you 10-year low. this currency which closed down for six weeks of a row saw relief this morning. bitcoin, above the 10,000 level. fascinating to see where it goes the market. the highest level since october. we haveou back -- 2020, seen 40% onto bitcoin. is it a hedge? is it a bird, is it a plane? i don't know.
have a look at nymex crude. we dipped below $50 on wti. how much will the opec+ regime give to the market? an early meeting looks unlikely. we have this moment of relief this morning. the question is how enduring it will be. nejra: good morning. no relief in terms of asian equities. a second day of declines on the msci asia pacific index. china outperforming a bid, might have to do with the liquidity moves from the pboc. with the u.s. futures, the y recouped their losses. the 10-year yields, despite the strong jobs report friday, it dropped, but it was steady today handle.1% manus: and the top story, the context of the coronavirus. 910,eath toll stands at
with 40,000 infected. by the time the virus reaches its peak, after 500,000 people may be infected in wuhan alone. that is according to a study. organization'sh chief is concerned about the spread of disease from people with no travel history to china. traced to aases business meeting in singapore, have reached three european countries as well as causing infections across asia. nejra: and all this as a number of companies reportedly resume production in shanghai. it has been a hard-hit china's economy. the pboc is offering relief to banks today. joining us now is benjamin jones from state street. bridge to have you with us today. are looking at high-frequency indicators to try to gauge what kind of ripple effects it will have to the global economy.
our the markets underestimating the impact? i keep hearing the phrase v- shaped recovery. mohamed el-erian says it could bel-shaped. benjamin: the numbers we are getting out of europe from end of last week were looking rather shaky, so best to say the list. athink we are looking for reasonably decent recovery, but how quick it comes is the biggest question. we had some fairly optimistic -- slightly better numbers from the virus, showing that perhaps the infection rate is starting to slow. i think we will get more of a u- shaped recovery. i think china will do all that can to make sure the recovery comes strongly. i think that is why you are not seeing any panic at the moment in the markets. manus: benjamin, good morning.
mohammed went on to expound back to 2008. the risk is about counterparty risk in the banking system. but we will come back to that. boc has injected liquidity, a gargantuan amount -- the pboc has injected liquidity, and amount of 2 trillion yuan. what is the most important ramification of that for the markets? theamin: i think ramification is what i've actually has impacts on the real economy. i think it sends a signal that the pboc and the chinese authorities will do everything they can. i think that will give sentiment of boost going forth. so i think it is a positive sign. the other thing we have to bear in mind is we are coming to the and the five-year plan, end of a 10 year-period where china says it would double gdp over that period. 6% this to had
year to do that so i think they will do everything in their power to hit those targets. and liquidity measures we are seeing so far is how they will do that. i think that is positive for sentiment going forward. given if you are a little shaky in the short-term. nejra: the s&p's is saying that the virus outbreak may add $800 billion of new bad loans. this is a banking sector that was already looking fragile before the coronavirus. are they factoring that side of the equation into this when they fact that thee pboc will step in and save the day eventually? benjamin: i don't think that is the main focus. best if it were an issue in the u.s. or europe, it would be more of an issue because you would worry that the authorities would not step in and cover those lows. in china it is different because the authorities will come in and write those debts off pretty
quickly. they have shown willingness to do that in the past. because it is more of a controlled economy i think we should worry less about those issues. manus: what has the past three or four weeks forced you -- if that is the right word -- to do or to reappraise from a position or tactical maneuver? guest: i think like many investors, it has forced me to sleep less. i am not sure it has forced me to reassess an awful lot, because people came into this year slightly cautious. remember, this is the second black swan this year. on the third of generate, we had tensions in the middle east. so this is not the first problem this year. i think people are looking for all those things to go wrong at the moment, but that tells me investors are not quite complacent right now. it is showing investors that it is very hard to invest in a
world where you have got these geopolitical risks spiking all the time. with something like the coronavirus, none of us are epidemiologists are experts, everybody freely admits, but we are trying to assess that, trying to make some historical comparison, which are very difficult to do. because we don't have the data to do that at the moment. for me, that is keeping a lot of investors on the sidelines, but in the back of their mind i think the -- over the last decade when we have had these problems come banks have put up liquidity into the system be it from the fed or the pboc and every time, that has worked. at we think that is likely to continue through 2020. nejra: benjamin jones from state street stays with us. let's get to the first word news. in ireland, sinn féin is the biggest winners -- one of the biggest winners of this weekend's election. it is projected to come in second, with 37 seats.
it is ahead of the prime minister's party. all our short of the majority. the final result is expected today. in the u.k., prime minister boris johnson is gearing up to announce a boost in if a chart to -- boost it infrastructure spending on the north of england. we have learned that the program will include 40 million pounds of 5g wireless networks for rural areas, and investments in mass transit. bitcoin is back above $10,000. its momentum carried it to the level for the first time since october. bitcoin has had a world ride, down nearly 75% in 2019, doubling the value in 2019. it has now gained about 40% so far this year. the big winner at last night's "parasite." and one of the film for best picture, making it the first
foreign-language film to do so. other big winners included working phoenix for "the joker," and renée zellweger for her portrayal of judy garland. global news, 24 hours a day, on air and on @quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. manus. manus: coming up, we did deeper into the oil story. line.ers at the $50 and opec+ meeting to decide the production cuts to offset the coronavirus is looking shaky. this is bloomberg. ♪
manus: it is "daybreak: europe," i am manus cranny in dubai. nejra: and i am nejra cehic in london. the world health organization's china representative has called the situation in you to science. he spoke to bloomberg, and was asked what would happen this week when china returned to work. >> when people are coming back
to work, there is, of course the possibility of some uptick in transmission. how much of that will happen depends on how deeply is the return to work. we are watching this part also carefully. is not clear -- it yet that there has been a full return to work. for example, a return to major construction projects. here in beijing, there is a strong suggestion that companies that can allow their workers to do teleworking, the use the telephone and the internet, this is still being very much encouraged. the control that measures have to be a balance between maintaining some essential economic activity and economic development, because that in itself, if it is constrained, can lead to
important health consequences -- reduction in quality of life, even increased death. so there has to be a balance between the economic activity and the containment measures. we are hoping that this balance will be achieved, and still allow the decline to happen. >> china is still facing shortages in medical supplies. what is the who doing to alleviate the problem? guest: the shortages are very strong. it is painful. nots less the who -- who is supplier and logistic, it is more a technical support agency, but there has been an activation of the u.n. system. , beforeew minutes ago this interview, we were just talking with the rest of the u.n. system, our colleagues in
unicef ,undp, and other agencies are involved in procuring and helping to meet the shortage. but in china, largely, the met.age is being meet the efforts to shortages is through mobilization in other provinces as well as the ramping up of production. nejra: wti is hovering above the ahead of an mark, extraordinary opec+ meeting to offset the coronavirus is looking unlikely. annmarie hordern has the details? annmarie: of the coronavirus has really continued to impact oil markets. we have a very simple chart, a chart that really matters. wti hovering around $50 a barrel, brent crude just below $50 a barrel.
oil markers are just waiting to see what will opec+ do. we heard from the azerbaijani oil ministers begin to local press, saying he doesn't think an emergency meeting will happen in february. he thinks in march. manus, don't pack your bags or change of flight yet. a lot of this has to do with russia. the saudis want to act urgently deeper. we heard from alexander novak on friday saying that in the coming days, there would be a response to some of these proposals. that technical committee says opec+ should cut about 600,000 barrels a day more on top of the already deeper cuts. 'thes ball is in russia cour -- the ball is in russia's court. until then, there will be pressure on oil prices. manus: annemarie, thank you very much. i am not changing my flight, i am off to ireland. benjamin jones is our guest host, from state street. we are trying to understand what side this -- what size this
demand shock is. we understand there is 50% less demand from china. do we need to see something more substance than 600,000 barrels from opec to stabilize? benjamin: i think you do, and am not sure we are going to get it necessarily. the problem is that even prior to this virus, we saw the oil market was fairly oversupplied. a lot of that is what is happening in the u.s. with the explosion in shale oil, and production reaching the 13 million barrels a day. so i think you would need to see very deep cuts from opec to get any stabilization, and i don't think the 600,000 barrels a day is enough. moment,eeing at the that 15% you were referring to is the equipment of 2 million barrels a day. i think coming off-line in china. that six under thousand the thanks, anywhere near that.
it depends -- that 600,000 barrels doesn't go anywhere near that. i think there are still going to be lasting impacts from those travel issues. at the same time, we need to bear in mind that on generate 15, the phase one trade deal, which we have all forgotten in it asked forle, china to import over $18.5 billion worth of oil from the u.s., rather than other places in 2020. that means opec is going to become less and less influential, than opec+ will become less and less influential going forward. so i think all the signs that annemarie was pointing to our four more downward pressure on oil going forward. nejra: we have had a record of run of losses in copper. one analyst saying the virus impact has barely been priced into commodities. basically they talk about the outbreak going to die to have a massive human and economic
impact, disrupting supply chains, creating headwinds for chinese demand and imports, that have barely been priced into the commodity markets. they include copper, palladium and others in that. they say those metals in which china is a big net importer will see major increases in inventory. if what they are saying is right that the commodity markets have barely priced it in what, impact does it have for an allocator across assets? benjamin: it says stay away from those commodity assets. but i think it depends on how quickly you get this recovery and what china does in the us to military efforts. if china goes back -- does india -- goes -- you get this recovery and what china stimulatoryr efforts.
we might see it recovery in copper later in the year that in the immediate term, i think you stay away from commodities and other sensitive areas in the short-term. manus: the pboc wants to flag everything except railways and gargantuan stimulus a little more than what they have done so far. let's get a quick hedge out of you. bitcoin or gold, what would you prefer? prefer gold. obviously, bitcoin is interesting. would i suggest that my clients, no. i think it is a little fun to have on the side perhaps, but gold certainly does work in asset allocation at the moment, for a couple of reasons. it offers somewhat of a hedge to risk, as you mentioned. it also, is an inflation hedge, which is something we were seeing pick up at the end of last year. it also offers a hedge in this era where we are getting risks,ned geopolitical
and it has gone to pay bump were other nations don't want to rely on the u.s. and specifically on the dollar. one of the big things i was looking at in 2019 that i think will continue in 2020, was the amount of gold central banks were buying. we saw holland add 100 million tons. russia and china all adding to their reserves. it has a lot of capacity to continue to do so. i think that is a big positive. etf demand is still positive. the positions are quite low as to the peak we saw in 2012. there is still capacity for investors to buy gold. manus: i would not have expected you to remotely suggest bitcoin should be added to your portfolio. just a bit of risk for the weekend. coming up, after last week's bombshell from credit suisse, we digest the groups numbers on
nejra: mrs. bloomberg daybreak: europe. i am nejra cehic in london. manus: and i am manus cranny in to buy. let's get a snapshot of how the week looks. tomorrow, the second part of the race to become democratic candidate for president in the u.s. kicks off in hampshire with the democratic primary. you have the fed chairman jerome powell delivering his semiannual policy report. nejra: on wednesday, nato bama defense ministers kick off a two day meeting in brussels. on thursday, we get tidjane thiam's last earnings report as
ceo of credit suisse. we also have a ton of earnings in europe this week as well as credit suisse. we have numbers from rbs, andeley and as --barclay others. through: obviously, 2019, we were seeing a bit of a downward drift in earnings, but it wasn't really just interest -- it was just interest, not a collapse. the numbers have been coming out of the u.s. and they have given us a bit of confidence. we have these relative to mrs. as you attempt to expect. the number of beats we are getting are not as many as the past, but we are enough to get u.s. earnings on flat. in europe, we saw a pickup in earnings again, despite the fact where you had actually more misses than beats. on the tech side and on the health care side, even on the financial side, you get more
indication of that later in the week, some of those numbers have been better. is that it turning point for financials, i am not really sure it is. the earnings season has been a positive so far. the risk comes in the next couple of quarters. if we do see this coronavirus getting worse and that having a big impact on earnings. it needs to be a big impact. we can see earnings stay sideways or have low levels of growth and still be in positive territory. manus: thank you very much, benjamin jones from state street was the earnings outlook -- we will return to the earnings outlook shortly. coming up, how close is the new hampshire democratic primary? five of the latest polls on the state seem to disagree. the democrats in presidential race. we will break down the names, the numbers, the risks, and how you play the market for 2020 in terms of the names in the frame. this is bloomberg. ♪
nejra: good morning from bloomberg's european headquarters in london, i am nejra cehic, with manus cranny live from dubai. these are today's top stories. >> coronavirus debts exceed the total from sars -- deaths exceeded the total from sars, as the hole says it may just be the tip of the iceberg. some companies will resume china-based operations. effect, gold holds gains on the hole's warnings. oil is above $50 a mark as an opec+ meeting looks unlikely.
jay powell says it is hard to understand china's economy, and the coronavirus has made it even harder. he testifies to congress this week. markets are also keeping an eye on the big primary in new hampshire. ♪ numerous fish after the best week for global equities since june last year, european futures lower. a lot of asia trading in the red. the 10 year treasury yield below a 1.60 handle. we get all the action from the world, manus. manus: we do indeed. liquidity, liquidity, liquidity. reassurance from the pboc is what has grasped the narrative this morning. for a contest from the bloomberg quint, we have niraj shah in mumbai and our very own annmarie hordern.
anne-marie, looking at the dollar yen the correlation with u.s. stocks. annmarie: a great chart out of asia standard charters fx macro unit is talking about the fact that given the coronavirus, it will be a catalyst for risk. they are saying they are looking at the dollar-yen's correlation with the us stocks. that remains strong. and the yen will be something to focus on especially given the fact that the coronavirus can be risk-off haven trend. they say it remains strong, even though they are not seeing the correlation so much with em equities. they say that has weakened but it remains strong with u.s. equities. nejra: thank you so much. niraj,, what are you seeing? niraj: good morning to both of you. markets have started lower, but for the last five days, it was on a gaining streak.
it has come off today and quite rapidly for two reasons. one, of course, the coronavirus is impacting all metal stocks. also because india's largest company has reported a very poor set of numbers. the stock is being plagued by that as well. both of these make the nifty five-dayex snap a gaining streak. back to you. nejra: thank you so much to bloomberg quint niraj shah and annmarie hordern. back to our top story. the coronavirus death toll has reached 910 people, with confirmed cases not topping 40,000. the world health organization's chief voiced concern over the spread of the disease from people with no travel history in china, as cases from a business meeting in singapore have reached three european countries. this comes as a number of companies have reportedly resumed production in shanghai, including samsung and
lg. tom mackenzie joins us from beijing. we heard that this is just the tip of the iceberg. what is this looking like on the ground? gives us an update. debts continue to increase, above the sars level. the number of infections is 40,000. what we are seeing in terms of the infection rate is signs over the last few days of stabilization. and you do have some experts now saying that according to their models, the numbers of cases might start to peak around mid to end of february. of course, the usual caveats around the quality of the data that we are getting from china, the levels of transparency. we have experts traveling en route to china to wuhan, from the world organizations. too experts from the u.k -- wuhan from the world health organization, also experts from u.n.
even though the modeling shows a peek to where the ends of february, the numbers show that you could get one in five people infected. essentially half a million people. so the numbers are stealey fairly -- are still fairly e ye-watering. but it does show that the rate of infections are starting to stabilize. manus: tom, thank you very much i am sure we will be speaking to you more the next couple of days. tom mackenzie, our chinese anchor in beijing. the buttigieg appears to have sealed his victory in iowa, after the state democratic party release corrected results from the caucuses. now, attention shifts to new hampshire for the democratic primary. here is what you will need to know ahead of the event. >> we are going on to new hampshire victorious! [applause] >> people in in hampshire like to say iowa picks scorn, we pick president.
the numbers would seem to back up that claim. in 14 of the last 17 new hampshire primaries, the winners went on to be elected president. in the other three primaries, the second-place finisher ended up in the white house. some democrats say that this year, may be the results should come with an asterisk. bernie sanders is from vermont. elizabeth warren is from massachusetts. joe biden's allies point out the candidates from neighboring states always have done well in a new hampshire. biden is downplaying expectations while going after sanders, a self-described socialist. >> he calls himself a democratic socialist. we are already seeing what donald trump is going to do with that. >> as of the middle of last $3.6, sanders had spent million on tv and radio ads in new hampshire. warren and biden weren't even close. of course, biden spent $5 million on ads in iowa. perhaps he is counting on the
long-held belief that in new hampshire, you win votes in person, not on the air. a complication the front runners hadn't counted on a week ago, pete buttigieg is now mentioned with them. >> we are not building a coalition calling out to everybody, progressives, moderates, independence and forward thinking republicans, to bring about that better day. >> the race could be decided by voters who aren't even registered democrats. almost 40% of them are likely to be independents. for years ago, three fourths of them went for sanders. it turned a tight race with hillary clinton into a landslide. we will have special coverage of the new hampshire primary on wednesday from 8:00 a.m. hong kong time, that is 4:00 a.m. in dubai, 7:00 p.m. tuesday in new york. even i am not in the office at 4:00 a.m.. jay powell conferences it is "very hard to understand china's
economy." and the kronos outbreak has made that exponentially -- the coronavirus outbreak has made that expressio exponentially moe difficult. this year size of the china's economy means any hit of its growth from the epidemic will have a knock-on effect on the global economy. benjamin jones with state street i.with nejra and i had a conversation with one of we cannot be said, overly optimistic on the right, but he cannot be gun-shy on the left in terms of its power to act. it is a balancing act of this week. benjamin: it is. i think one of the things we're seeing from the fed, not just from powell but from other fed speakers is that over the course of recent months, the fire for hiking rates has been raised quite significantly.
the bar to clear to cut rates has become a little bit easier. i think he is probably going to sound off a little bit more dovish, but reemphasize the top, thatmade at the we have to wait and see how the coronavirus hits chinese economy, than the global economy, and ultimately, the u.s. economy. i think at the moment, the fed seems ready to cut again. if i were sitting here at the end of december and beginning of january, i would have said the fed sits on its hands alter the year. changing.sly, that is i think we have got to now consider the idea that we get it other cut from the fed -- get another cut from the fed, may be around june, unless there is a rampant pickup in the economy which looks uncertain at the moment. easing monetary policy
from the fed and from all central banks in 2020 will be the role of the day. view thatyou get the the coronavirus outbreak is occurring on the back of a healthy u.s. economy, and the jobs numbers on friday supports that view, and you expect one cut from the fed in 2020, does that mean you're prepared to allocate to u.s. equities over other parts of the world. benjamin: it does. there are many reasons i still prefer u.s. equities. a lot of that goes back to the tech cycle. when other things you we were talking about before the middle east, and before the coronavirus was this nascent pick up in the tech cycle. well.ming online of 5g as all of that gears into the tech companies, and where are the biggest tech companies, in the u.s.. they have the best earnings and backdrop.h if you are getting low rates, it pushes you more into growth and less into value, and that puts you into u.s. equities. the u.s. is still the best place t for us to be.
emerging markets have been painful in february, that with the big dig up in the tech cycle, that could be very good for the e.m. markets. and if you get easing, that would be another tick in that box. manus: the mliv team are saying that the correlation between treasury yields and the em probably sets the stage for a little more pain if you take that tracking momentum. we put this into the gtv library, talking about what -- we have been banging on about this 1.5% level. if you look at this, you have got 10-year yields in white, trending down. then you have the manufacturing numbers at the bottom. we just zoomed that out. trending higher. he would make the point that the bond market needs to see a near-complete collapse in a global pmi's to really want being here. would you be concurring with that, in terms of is the bond
market overly pricing the downside? ijamin: i am not sure -- think it is probably overpricing the downside of manufacturing. shifterlook at the u- cover in china, that is subtly is. data was looking better. we were looking for that nascent pick up. i think what the bond market is seeing is that over the last few years, it can believe the fed into doing what it wants. forkind of excuse or reason bad news, the bond market will push yields lower and that will push the fed to move. of ank there's a bit disconnect between the manufacturing side and the bond market because it is trying to push the fed. nejra: i want to come back to what you said about tech and the fact they have quite a high conviction. we talked about mohamed el-erian saying, don't expect a quick china rebound from the virus.
he used the phrase "cascading sudden stock dynamics." you could refer that to the tech sector, because the coronavirus epidemic could choke off the world's electronics and have ripple effects through the supply chain of unknown quantities. is that something you are factored into your conviction? does that conviction have to do with the low yields manus just referred to? benjamin: it is a risk, something you have to worry about. you can't ignore that idea. there is always a worry of how brought is that the stock. most of it has been focused in wuhan. but there are many foxconn factories not too far away from that area, for example. so that feeds into the supply chain issue. the company's were talking about at the top of the hour, they are starting to come back and they are starting to manufacturer again, so perhaps we shouldn't be overly pessimistic around that side of things.
the other thing to think about is tech is not just about semiconductors. semiconductors are probably the area i like most at the moment, because i see this 5g tech cycle improving. but on the other side is the software side. things like microsoft, apple, google, they are less impacted in those areas. we saw some of the numbers coming out from the software and services company, particularly in cloud computing, coming out very strongly. that is definitely less focused on china. they don't generate a lot of their revenues from china, but for the rest of the world. i don't see that cycle disappearing. so tech is pretty much the place for us to be. nejra: benjamin jones from state street stays with us. coming up, making history in hollywood's most star-studded night, with "parasite" taking the picture for best the sticking on the award for best picture, the first foreign film to do so. that is next. this is bloomberg. ♪
>> bloombergs annmarie hordern, thank you very much. u.k..turn to the foreign secretary dominic rob is touring asia as he six support deal.e trade an he mety with his japaneset counterpart inh tokyo. he wants to complete a deal with japaning by year-end. speaking with. supporters in singapore, he added that britain remains hopeful the u.s. trade deal will be part of its first wave of agreements. benjamin jones from state street is still with us. how positive are you on the pound at the moment? benjamin: not at all on the pound at the moment. again, there has been a bit of a tough call to have in the early part of this year. i think for us the idea that brexit was done at the end of january is a complete falsehood. only have done is move to this difficult stage -- all you have done is moved to this difficult stage. it is difficult to see that in the next 11 months we will have
a comprehensive trade deal with europe. these things take longer. very difficult to see us having you trade deals with others like asia and the u.s.. some of the comments we are seeing last week from the u.s. saying that now that the u.k. is ,'s 5g technology that puts a bit of sand and the wheels to get the trade deal put together. i think it is a significant worry. there will be a conversation, and they will model onto through the year, but nothing is going to play out properly until the very end of this year. for me, the negative on pound is a data coming on. pmi's were a little better but the retail sales were very weekend. theyre actually expecting would cut in their final meeting in january. we were wrong. that puts us negative on the pound. manus: if you are negative on the pound, what consequence is that? there was a headline on bloomberg first word -- once it was risky iee u.k. equities now
it is too cheap to ignore. so where do you stand on that? by the way, that is morgan stanley, and i am aggressively paraphrasing. are they to be avoided at all costs, or temperament entrance -- temperate entrance? benjamin: depends which part of the market you are looking at. the large-cap stocks, it is a positive. if sterling weakens, we see the overseas earnings component go value. the ftse 100 for example generates about three quarters of its earnings from overseas. in a sterling weakness for me, certainly over the last three or four years, i have just been looking to my fx colleagues and saying, what do you think on the pound? and i will do the opposite on the u.k. equities. that has worked out very well. the slight issue with what we had in general he was the significant downtrend in january.es -- in that hit the commodity sectors in the u.k. and they make up around a quarter of the sterling
capture. that is a bit of a headwind. the large-cap exports are still a positive. manus: jp morgan also cutting their view on cable as well down to a 1.27 from 1.32. benjamin jones from state street, thank you very much. coming up, a hedge fund manager takes aim at the hater in chief of the communist party's backed times." we discuss what is, to say the least, a heated exchange online. that is next. . ♪ that is next. . ♪
positioning. a record amount of equities, meanwhile, a trade based solely quantumility levels, funds, have become more. sensitive to mark selloffs strategists say that it 2% move lower on the s&p could prompt a cohort to sell $5 billion worth of equities, inextricably linked to volatility. you are thinking that in terms of volatility repressed for 2018 into the 19. we lamented the repression of volatility. it has been reignited. to what extent are you concerned about that, or do you prepare for more? guest: i think of relativity has been will come so far given the events -- volatility has been welcome so far given the events we are talking about. i would actually disagree with what you are saying about positioning in risky assets and inequities. equities.ee -- and in
we don't see that degree of complacency in investors. you hear about stronger volatility when you get the extreme positioning. we just don't see that. we do see a lot of cash on the sidelines, not in equities. you can see that on a number of different quarters. you look at all the hedge funds for, for example, equity market moves have been falling, not rising. so it doesn't look like hedge funds are max long at the moment. that means you don't get these be outside moves in currency -- outsized moves in currency. it is that buy the dip mentality. to say that was issuing, to say that everyone is max risk is complacent, it is wrong. i don't see that. manus: your state street investor confidence index shows investors are quite worried. if they are holding cash on the sidelines and looking to deploy
it, where do they want to do that at the moment where they feel confident about it? benjamin: a lot of it will go to the u.s., into attack, into those kind of houses -- into tech. a lot of it was going to europe but it has drifted back a bit. i think people are worried about the manufacturing slump and europe gets hit the most. some of it is actually find its way to emerging markets. you haven't seen the panic selloff and russia away from emerging markets evenly have the dip coming through. i -- again, this is dipping the toe back in the water. you are right, our investor confidence is at low levels. i don't see that euphoria peaking in the market right now. manus: i love it. much.in, thank you very a lovely way to leave us, no minsky moment. senior multi-asset strategist at state street. that is it for daybreak.